It’s difficult for me to turn on the television these days. The talking heads’ discussion of the national deficit and the much-fraught over debt default is dominated by right-wing dogmas. Propagandists in the Democratic and Republican Party should be congratulated for their stunning achievement in these talks. They’ve managed to stand reality on its head. Republicans are successfully framing the issue of corporate wealth as one of unfair and crippling “taxation.” Democrats seek tepid increases in tax revenues, while portraying massive cuts in Social Security, Medicare, and other programs as a “worthy” and “shared sacrifice.” The tax scuttle revolves around efforts by President Obama to raise a measly $1 trillion in revenue (to be found either in closing tax loopholes or raising incomes taxes for the rich) in exchange for $3 trillion in cuts to social spending for the masses. What a deal for working class people! Republicans have rejected even this 3 to 1 advantage in talks, a sign of just how extreme they have become in serving their corporate masters. As happened with the Democrats’ corporatist health care reforms, Republicans cannot be expected to sign on to legislation that is a boon for big business and Wall Street but asks for even a miniscule amount from those of wealth.
Republicans promise that “tax hikes” will cripple the economy (too late!), and Democrats are set on making such hikes a small part of deficit reduction. Both parties have pulled an impressive sleight of hand trick on the American people. When sacrifices are called for from the wealthy, they’re referred to as a debilitating “tax increase” by Republicans, while Democrats accept this distortion and insist on minimal revenue increases from tax code changes. When the discussion turns to Social Security, Medicare, and Pell Grants, we begin to hear Democrats talk of the need for shared “sacrifice” and for vital “cuts,” as if working class people taking it on the chin is inherently superior to tax increases on the rich.
A news flash to the American public: benefit cuts to Medicare and Social Security ARE a tax hike, even if Republicans and Democrats won’t admit it. If confiscating money from people’s Medicare funds and their Social Security checks to pay off wars and tax cuts for the wealthy isn’t a tax hike, then what is? Any legislation that imposes increased costs on the public in terms of limiting their ability to provide for themselves amounts, realistically, to a tax increase. The Senate’s “Gang of Six” deficit plan, which calls for $300 billion in cuts in Medicare and between $500 to $1,000 a year in cuts for each Social Security beneficiary is a classic example of taxation without representation, as the cuts are strongly opposed by the public. We should recognize this reality, and reject the Orwellian “distinction” between “harmful tax hikes” on the one hand, and “necessary shared sacrifices” on the other. The case for increasing taxes on the majority while exempting the rich has not been made, and we should be honest about that.
The “Gang of Six” plan is audacious in the sacrifices it asks for from working Americans. Senator Bernie Sanders warns that the “Gang of Six” plan calls for cutting taxes by $1.5 trillion over ten years, with most of the cuts going to the richest Americans. The group is asking Medicare and Social Security recipients to accept serious benefit cuts, while shielding the affluent from having to make sacrifices.
Unshared sacrifice is outrageous at a time when the baby boomer generation will require greater resources dedicated to health care, rather than less, and when the Social Security program is enjoying a surplus. The effort to cut Social Security is a pet project of both parties, which are assaulting the notion of collective, government responsibility to provide for the general welfare. Need proof? Simply look to the limited “shortfall” in funding for Social Security that we hear so much about. That shortfall is not even projected to appear, in terms of the inability of the government to guarantee full benefits promised to the retired, until 2037. In other words, the Social Security “crisis” is entirely manufactured. It’s a “problem” that we can deal with (and rather easily by increasing the proportion of the payroll tax paid by the wealthy) at some point over the next two and a half decades. Unpopular cuts don’t need to be rammed through and imposed on the public in a matter of days.
The Obama administration has pushed American political discourse to the right. Obama is effectively out hawking the Republican Party by calling for cuts in Social Security which were (until his recent overture) not even on the agenda for the Republican rank-and-file. Obama was wrong to agree to such cuts in principle; now Republican House Speaker John Boehner says he won't agree to a debt ceiling deal without them. Liberal defenders of Obama claimed he was just playing rope-a-dope with conservatives, putting all types of social spending cuts on the table that he wasn't really serious about, simply to show how extreme Republicans had become in their unwillingness to make a deal. This liberal fantasy is wrong, as Obama has long indicated support for cutting Social Security. It’s also unfair to scapegoat the Republicans by placing all the blame at their feet. Everyone knows that Republicans have been drooling over the prospect of gutting Social Security for decades. It’s the Democratic agreement to that agenda that is a novel development.
The sad truth is that Republican Senator Mitch McConnell offered Obama a way out of the debt ceiling impasse by proposing a three-step vote to allow the president to increase the national debt by up to $2.5 trillion in the next year, while vetoing any Congressional efforts to impose spending cuts the president sees as undesirable. This isn’t a sign of any grand insight on the part of McConnell; it’s about political preservation, pure and simple. It turns out that Republicans are having second thoughts about holding Wall Street hostage via the threat of debt default. Although they’d love to force a deal before August 2nd to cover the costs of Republican wars and tax cuts by cutting social spending, that goal isn’t worth achieving if comes at the cost of destroying the investment and finance sector.
McConnell’s “last choice option” plan to raise the debt ceiling was a major concession to the Democrats. Obama could have secured a victory for the American people by refusing to negotiate social spending cuts as part of a debt ceiling deal. This would have allowed Obama to position himself as the protector of Medicare and Social Security benefits going into 2012, against Republican efforts to gut those programs via the Simpson-Bowles deficit commission and the Paul Ryan Medicare-privatization proposal. Obama chose instead to go the deficit hawk route, putting entitlement programs first on the chopping block.
Obama could have agreed to a short term borrowing increase (via the McConnell “last choice option”), while still pursuing deficit reduction. There were a few choices available to him: 1. Allow the Bush tax cuts, which disproportionately benefit the wealthiest one to five percent of Americans, to expire at the end of 2012, and collect the subsequent revenues in order to help “balance the budget.” This approach would serve as a sort of automatic collection of some of the $1.9 trillion in cash that corporate America has been hoarding and refusing to invest in job creation over the last few years (largely due to an anemic economy and weak consumer demand). 2. Obama could have announced a plan as commander in chief to commission a dramatic reduction in military spending, as pursued through a rapid de-escalation in Afghanistan, a cessation of U.S. violence in Libya, cuts in wasteful military boondoggles, and an announced closure of military bases throughout the world that are largely counter-productive to the promotion of national defense (how vital are bases in Japan and Germany to protecting the U.S. against the “terrorist threat” is a question we should all be asking).
The U.S. currently spends about $1.2 trillion per year total on “defense,” but cutting that budget to pre-9/11 levels (to about $750-800 billion a year) would produce at least $4 to 4.5 trillion in savings over ten years. Letting the Bush tax cuts expire would increase revenue and help close about 40 percent of the current budget gap between spending and revenues. By restoring the Clinton era tax rates, Obama could secure an additional $3.45 trillion in revenues from 2012 through 2020. Both military cuts and tax code changes, then, could save the U.S. government about $8 trillion over the next ten years, or $4 trillion more than the savings proposed by Obama in the debt ceiling talks. Such savings constitute a staggering 55 percent of the entire national debt. Obama has not indicated support for either of the above options – a strong indication of how serious he is in the deficit talks.
The above policies should be pursued, if for no other reason than as a basic issue of fairness in a democracy. Does public opinion matter any longer in this country? If it does, military cuts and tax hikes on the rich would be the first issues on the agenda, rather than an afterthought among those claiming to represent the public’s best interests. Of course, Obama has no interest in reducing the size of the now-permanent U.S. military state. His foreign policy has been implicitly predicated upon the “less talk, more bombing” approach, which further institutionalizes the Orwellian state of “endless war” introduced under Bush, and further solidified under Obama.
Obama and Congressional Republicans have been perfectly clear in explaining where their allegiances lie. They’ve chosen bloated and wasteful spending on the empire and never-ending tax cuts for the rich, while declaring war on social spending. This choice may cost Obama dearly in near future. He will no doubt curry additional favor with Wall Street with any deal that exempts the rich from sacrifice, but no post-World War II president has ever won re-election with an unemployment rate as high today’s. Reducing government spending will do nothing to restore the lack of consumer demand – which is the main impediment to renewing economic growth. Obama’s betrayal of the elderly and retired will likely de-mobilize many liberal and progressive Americans who are looking for the president to display some of that progressive “hope” and “change” he promised back in 2008. In “winning” the short term battle over extending the debt ceiling, Obama and Congressional Democrats may very well lose the war when it comes to retaining their increasingly tenuous hold on government.
Anthony DiMaggio is the co-author with Paul Street of the newly released Crashing the Tea Party (Paradigm Publishers, 2011), and the forthcoming book: The Rise of the Tea Party (Monthly Review Press, September 2011). He is also the author of When Media Goes to War (2010) and Mass Media, Mass Propaganda (2008). He has taught U.S. and Global Politics at Illinois State University, and can be reached at: [email protected].
ZNetwork is funded solely through the generosity of its readers.
Donate